Agilisys Continues Agilely Post-SCT

Agilisys,
Inc., the former Process Manufacturing and Distribution division
of SCT Corporation (see iProcess.sct
Enters Golden Gate Opportunity), has been showing us lately that it has
swiftly moved beyond expected spin-off tremors, by leveraging its legacy of
a prominent pure-process industries enterprise applications provider to 1) gain
new customers, and 2) release new products under its new brand name and as an
independent company.

To
that end, on September 9, Agilisys announced that Sun Chemical, a $3
billion global company, has licensed the Agilisys Supply Chain Management
(SCM) solution for use at the Colors Group of Sun Chemical, headquartered
in Cincinnati, OH. Sun Chemical Corporation's Colors Group, one of the world's
leading producers of organic pigments and dispersions for use as colorants,
will be implementing the Agilisys supply chain solution across its marketing
and manufacturing organization which includes six pigment manufacturing sites
in the US and Denmark. Faced with complex global supply chain issues, Sun Chemical
began the search for a solution to improve its forecast accuracy and reduce
overall inventory. The Colors Group reportedly evaluated and selected Agilisys
not only because of its process industry focus, but also because of the company's
global support, collaborative capabilities, implementation speed, user interface
(UI) and overall strength of the supply chain product offering.

This
is Part One of a three-part analysis of recent announcements by Agilisys.

Part
Two will discuss the Market Impact.

Part
Three will address the Challenges faced by Agilisys and make User Recommendations.

Other Announcements

Earlier
in July, Agilisys announced that Bernard Matthews Limited licensed the
Agilisys Advanced Planning solution for its six factories in the UK,
while further expansion of the solution to facilities in Hungary is expected
next year. Bernard Matthews Ltd. is the UK's leading producer and brand leader
for fresh, chilled and frozen turkey products. Another July victory came from
Coca-Cola Enterprises, which has licensed the Agilisys Demand Planning
solution for their Belgium and Netherlands operations.

Coca-Cola Enterprises was reportedly looking for a flexible demand planning solution that not only had a high degree of functional fit but was also easy to implement, while other key requirements were the ability to handle a large variety of products and manage the many sales promotions (e.g. at the market region-product level or at the customer-product level.) In addition, Coca-Cola Enterprises also required that the solution would integrate well into the company's existing legacy systems. To that end, the web-based Agilisys Demand Planning solution should enable Coca-Cola Enterprises to reduce inventory costs and improve service performance through more accurate sales forecasts that will be generated centrally based on statistical analysis of historical data. The web-enabled collaborative planning capabilities should further allow key-account managers and regional distribution managers of Coca-Cola Enterprises to provide local knowledge and subjective input to assess and adjust the forecasts remotely, in order to come to the most accurate resultant forecast.

As
for addressing the issue of new brand awareness and new product releases, on
August 27, Agilisys announced the release of Agilisys ERP 4.0, its newest
version of the ERP solution for process manufacturers, which includes an enhanced
integration architecture, embedded Java technology, and new functionality for
actual lot costing, commodity pricing and agreements, and multi-company and
inter-company transactions, among other enhancements.

Furthermore,
Agilisys believes it deploys a unique development methodology, which embraces
collaboration with customers called "Concept to Customer", and which
centers on collaborative requirements development, design reviews, customer
testing of pre-release software, and an "Early Upgrade Program". The
process is part of a three-point approach to strategic development that brings
together customer requirements with technological evolution and market requirements,
enabling Agilisys to best respond with solutions that address the unique challenges
and competitive opportunities that are present in the process industry vertical
markets.

As for the functional enhancements, the company believes the new actual costing technology should set its solution apart from its competition in its ability to enable the management and tracking of actual direct costs and allocations on a lot-by-lot basis. One of the key issues with actual costing prior to Agilisys ERP 4.0 is that manufacturers had to wait until the end of the fiscal period to accumulate and allocate costs. The new actual costing technology in Agilisys ERP uses the actual transaction costs to value the initial transaction on a perpetual basis, deploying a Java-based "costing engine" to automatically update lot costs with post-transaction adjustments such as freight bills or voucher price variances. Cost adjustments are automatically rolled through to every finished lot in which the material was consumed.

Another believed key piece of functionality would be the ability to separate inventory valuation from managerial cost analysis, allowing manufacturers to capture valuable operational insight while complying with financial guidelines. The new 4.0 release also addresses the highly complex sales order process for products composed of commodity ingredients whose price may vary on a daily basis, and, to that end, the Agilisys ERP system recalculates the product price to maintain sales margins.

Typically ERP systems cannot address the complexities of commodity-pricing forcing companies to manage agreements outside of their automated systems and preventing them from adequately tracking the agreements and measuring profitability. Agilisys ERP 4.0 executes sales orders using formula-based pricing functionality that accounts for fluctuations in futures market prices and adjusts product prices within the structure of comprehensive sales agreements.

Financials

Pursuant
to the above events came the October 8 announcement of the company's first quarter
results of fiscal year 2002, and first financial results as an independent,
privately owned company. The quarter, which ended on August 31st, should therefore
mark a profitable and exciting beginning with new client wins, existing client
milestones, and a successful product launch. In addition to the above-mentioned
new clients, the quarter was also marked by existing customers who expanded
their use of the Agilisys solution through additional applications, such as
Central Soya, Coca-Cola Fountain, Kroger, Solvay Pharmaceutical,
Findus and Unimills. Also, in addition to the above-mentioned
launch of Agilisys ERP 4.0, the company also announced joint milestones with
clients marking the first go-lives of Business Analytics, Market Analytics
and the Applied Relationship Technology (ART) template of Complaint
Management.

From a financial perspective, the quarter reportedly surpassed all expectations, exceeding all management targets in cash flow, earnings, and total revenue. Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the quarter was $760,000, compared to the previous year quarter EBITDA loss of ~$2 million (adjusted to match the new fiscal year cycle) and an EBITDA loss of $3 million from the previous quarter. License revenue increased 15.4% over last year and 163% over the previous quarter, while cash flow from operations for the quarter was $2,3 million.

This
concludes Part One of a three-part analysis of recent announcements by Agilisys.

Part
Two will discuss the Market Impact.

Part
Three will address the Challenges faced by Agilisys and make User Recommendations.